Yes, FM must be expressly referred to and defined in a contract. Parties have the freedom to agree on the risk allocation and determination of an FM event.

Generally, the FM clause contains a carve-out for payment obligations.

• Depends on the specific wording of the FM clause and the factual circumstances.
• Generally, the party relying on the FM clause has the burden of proving the FM event by producing evidence of the impact of the event.
• The affected party is usually required to give a written notice of the FM event to the counterparty. Note the potential time limit imposed on such notification and the consequence of non-compliance.

• Depends on the specific wording of the FM clause.
• Generally, the affected party is required to use reasonable endeavors or diligence to overcome or mitigate the impact of the FM event.

• Depends on the specific wording of the FM clause.
• Performance is usually suspended for a short period or for the duration of the FM event.
• Following such suspension, an extension of time for performance may then be granted automatically or by agreement.
• If the FM event is prolonged or permanent then the clause may provide for termination by default or by agreement.

Exemption from duty to perform (section 275(1) German Civil Code): a debtor is "exempt" from performance in case the performance of an obligation is impossible, e.g. the performance of an obligation could become impossible in case of a lock-down imposed by the Government.

Frustration / clausula rebus sic stantibus: recognized under German statutory law. In essence, German law provides that a contract may be amended if one party cannot reasonably be expected to uphold the terms of the contract due to a significant change in circumstances from when the contract was entered into. In general, the threshold for frustration is very high. Courts would only allow an adaptation of the contract in exceptional circumstances. However, there are some cases where courts have adapted the commercial terms of the contract if the contract has become loss-making for one of the parties and if this is due to a change that was unforeseeable at the time of the conclusion of the contract.